“I was just documenting what Goldman was doing,” Carmen Segarra said. “If I was not able to push through something that obvious, the Federal Reserve Bank of New York certainly won’t be capable of supervising banks when even more serious issues arise.”
Carmen Segarra outside the Federal Reserve Bank of New York, on Oct. 10, 2013. In a wrongful termination lawsuit, Segarra says she was fired by the Fed after she refused to change a finding that Goldman Sachs had inadequate controls over conflicts of interest.
In the spring of 2012, a senior examiner with the Federal Reserve Bank of New York determined that Goldman Sachs had a problem.
Under a Fed mandate, the investment banking behemoth was expected to have a company-wide policy to address conflicts of interest in how its phalanxes of dealmakers handled clients. Although Goldman had a patchwork of policies, the examiner concluded that they fell short of the Fed’s requirements.
That finding by the examiner, Carmen Segarra, potentially had serious implications for Goldman, which was already under fire for advising clients on both sides of several multibillion-dollar deals and allegedly putting the bank’s own interests above those of its customers. It could have led to closer scrutiny of Goldman by regulators or changes to its business practices.
Before she could formalize her findings, Segarra said, the senior New York Fed official who oversees Goldman pressured her to change her view. When she refused, Segarra said she was called to a meeting where bosses told her they no longer trusted her judgment. Her phone was confiscated and security officers marched her out of the Fed’s fortress-like building in lower Manhattan just seven months after being hired.
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